Distribution Rules & Requirements
Different IRA types have different distribution rules. Understanding these rules helps you optimize timing and minimize tax impact on your precious metals investments.
Before Age 59½
All distributions subject to early withdrawal penalty plus ordinary income tax rates.
Exceptions:
- First-time home purchase (up to $10,000)
- Higher education expenses
- Medical expenses exceeding 7.5% of AGI
- Substantially equal periodic payments (SEPP)
- Disability or death
After Age 59½
No 10% penalty, but all distributions taxed as ordinary income at rates up to 37%.
Important Notes:
- Taxed as ordinary income, not capital gains
- Strategic timing can optimize tax brackets
Required Distributions
Must begin taking RMDs based on IRS life expectancy tables.
Key Details:
- Balance ÷ life expectancy factor
- 50% penalty for missed RMDs
Early Distribution at Age 45
Traditional IRA
$30,000 income tax + $10,000 penalty = $40,000 total
Roth IRA
$0 on contributions, penalty on earnings if within 5 years
Recommendation
Avoid early distributions; use other assets first
Compliance Requirements & Documentation
Proper compliance and documentation are essential to maintain the tax advantages of your precious metals IRA and avoid costly penalties.
Prohibited Transactions
IRS rules that can disqualify your entire IRA if violated
Prohibited Actions:
- Self-dealing or personal use of metals
- Using IRA metals as loan collateral
- Buying from or selling to disqualified persons
- Home storage of IRA precious metals
Consequences:
Entire IRA treated as distributed + 10% penalty if under 59½
Required Documentation
Records you must maintain for IRS compliance
Required Documentation:
- All purchase and sale confirmations
- Annual custodian statements
- Form 1099-R for distributions
- Form 5498 for contributions and fair market value
Retention:
Keep records for at least 3 years after filing return
Valuation Requirements
How precious metals must be valued for tax purposes
Key Rules:
- Annual fair market value reporting by custodian
- Use of qualified appraiser for unique items
- RMD calculations based on December 31 values
- Distribution values based on date of distribution
Importance:
Accurate valuations critical for RMD compliance